Proposed Changes to Alberta Automobile Insurance

Warren Berg 0:00

Good morning and welcome to the first edition of Ask the Lawyer for 2025 across Alberta on the Windspeaker Radio Network CFWE and CJWE . I'm your host , Warren Berg , and joining us this month are Cynthia Carels and Mike McVey from Weir Bowen LLP in Edmonton .

Cynthia Carels 0:15

Hey , thanks , Warren . I'm glad to be back on the air with you for another season of the show . Hard to believe , but I think we're now into Weir Bowen's fourth year with Ask the Lawyer on WindSpeaker Radio .

Michael McVey 0:25

Has it been that long , Wow . Well , we are happy to be here and to continue to build on this important partnership bringing legal education to our audiences all across Alberta .

Warren Berg 0:34

Now Weir Bowen is an Edmonton-based law firm . However , their lawyers have represented clients across Alberta , BC , Saskatchewan and the Northwest Territories and have been counsel in precedent-setting cases all the way up to the Supreme Court of Canada . So , Cynthia and Mike , I understand that today's topic is going to be a little bit different than usual .

Cynthia Carels 0:51

Yeah , rather than just talking about sort of the legal principles that our office deals with on a day-to-day basis , we're actually going to be talking about some really important current events that are shaping up on the Alberta political landscape , which is actually the future of Alberta's automobile insurance system .

Warren Berg 1:08

Now I've been hearing a lot about this on the news and I'm not entirely sure what's being proposed or what Albertans should be expecting in the coming years .

Cynthia Carels 1:17

Well , you're definitely not the only one . There has been a lot of publicity about the fact that changes are coming , but the specifics maybe not so much . So since November of 2024 , the Alberta government actually made an announcement about its plan for the future of automobile insurance reform in Alberta . But you know , a lot of people have been very confused about what's actually on tap , so we thought it would be a good idea to spend today's episode talking about . You know what we're anticipating as lawyers , specifically lawyers who work in this space and luckily for us , we have an expert in this world . Mike McVey here is actually uniquely positioned to help us work through this chatter , because he is actually the current chair of the Alberta Civil Trial Lawyers Association and they've been doing a bunch of work on this .

Warren Berg 2:02

So the Alberta Civil Trial Lawyers Association , that's a bit of a mouthful . What's that all about ?

Michael McVey 2:08

Yes , that's right , Warren , I guess . To start off , why don't we make that a little bit easier ? We tend to use the acronym ACTLA for short .

Warren Berg 2:16

And thank you for helping me out with that . Let me first ask you , what is the Alberta Civil Trial Lawyers Association , or ACTLA ?

Michael McVey 2:24

So ACTLA is a non-profit society made up of lawyers who practice in the civil side of our court system . There are two sides to our court system the criminal side and the civil side , and the criminal side obviously deals with criminal and regulatory charges . Essentially everything else family law , contract law , property disputes fall under the civil system , including claims related to car accidents . The mission statement of ACTLA is to advocate for a strong civil justice system that protects the rights of all Albertans and , as part of that goal , ACTLA believes in ensuring that Albertans are aware of proposed changes to laws and regulations in Alberta which could have an impact on their individual rights and freedoms , such as the government's proposed changes to car insurance .

Warren Berg 3:07

So what does that look like ?

Cynthia Carels 3:08

So , in particular , what's being proposed is actually a massive change to the civil rights of people who are injured in car accidents through no fault of their own .

Michael McVey 3:19

That's true and the government to date has referred to these changes as moving towards a care first model . But many Albertans would likely be more familiar with the term no fault insurance .

Warren Berg 3:30

Okay , so let's answer that question about what is no fault insurance and what do you mean by that ?

Cynthia Carels 3:36

So , essentially , no fault insurance means that when a car accident happens , insurance companies are going to be treating everyone the same , regardless of who was at fault or responsible for causing the accident . So , instead of suing other people , all parties are going to be involved and they're going to be entitled to the exact same treatment with their own insurance company under a predefined schedule of predetermined benefits .

Warren Berg 4:03

So I guess , how is that different than the system we have now ?

Cynthia Carels 4:06

So right now , in our at-fault system , also commonly known as our tort law system , the innocent victim or a person who was not responsible for an accident is actually able to pursue a claim against the wrongdoer to claim for their particular injuries and their very specific losses . So , as it currently stands , an innocent victim is able to claim for things like their pain and suffering , their specific loss of income , their future loss of income or their future loss of earning capacity more globally , as well as for their past and future care needs and their out-of-pocket expenses , for their past and future care needs and their out-of-pocket expenses . So the goal of our current system is to try and put innocent victims back into the same position that they otherwise would have been in had this wrongdoer not caused the accident .

Michael McVey 4:55

Now , the goal of a care-first model isn't so much about compensating innocent victims . Rather , it's purportedly about using automobile insurance to provide injured people with benefits towards their recovery , regardless of whether or not they are innocent or responsible for causing the crash in the first place .

Warren Berg 5:12

So isn't it a good thing that both parties have access to benefits ? I mean , honestly , most car accidents are well , just that they're accidents . So , if a driver makes an innocent mistake like any of us could potentially do , it does seem like there could be an overall benefit for both parties to have access to treatment under this care . First model , no ?

Michael McVey 5:32

Believe it or not , Warren , under our current system , both parties do have access to accident benefits through their own auto insurer , For example , all drivers , and their passengers for that matter , have access to coverage for medically necessary treatments following an accident . In addition to that , people who are also entitled to disability benefits if their accident injuries prevent them from returning to work . So that element of "care first is already well covered under the current system .

Cynthia Carels 5:58

And you know , Warren , you know I personally have been working in this space for over 20 years now and during that time we have already been through some pretty significant changes to the benefits that are available for people who have been injured in automobile accidents .

Cynthia Carels 6:13

And as it currently stands there's actually theoretically up to $50,000 worth of coverage that is supposed to be available for people's rehabilitation in the first two years following an accident , and that sounds like a lot of money for things like physiotherapy and massage and that sort of thing . But overwhelmingly injured people , you know , even under our current system , get nowhere close to using up that amount of money on their rehabilitation before those recoveries stall out or their benefits are discontinued . And if their recoveries stall out , once that happens , the medical professionals involved in the treatment plan might say that that injured person has basically reached their maximum medical improvement , after which there really isn't a lot of expectation that the person is going to get much better than they are .

Michael McVey 6:59

And that's something we see a lot for our clients who've been treating for a year or longer than the year that their treatment team just doesn't have any more ideas up their sleeves to actually help them fully recover from their injuries .

Cynthia Carels 7:11

And so by that point you know , an insurance company might have spent $5,000 to $10,000 on a person's treatment for things like physio and massage , chiropractic visits , acupuncture and that sort of thing . But if the insured person's recovery has actually plateaued and they're not getting substantially better , the insurer might just want to close their file and be done with it .

Warren Berg 7:32

So under the current system , what happens then ?

Michael McVey 7:35

Well , a few things can happen . So , first of all , their treatment team might just discharge them out of care . Another option is that they send them back to their own doctor for referrals onto more specialists or to a chronic pain management clinic . Alternatively , the insurance company might send the injured person to a physician of their own choosing to conduct what's known as an insurance medical examination .

Warren Berg 8:00

And what happens at one of these insurance medical exams ?

Cynthia Carels 8:03

So the purpose of an insurance medical exam is to give the insurance company itself an opinion regarding any further medically necessary treatment that's essential for the rehabilitation of the injured person . The trouble comes , though , when somebody's injury has actually plateaued , but they're not back to their old selves , and we can see these opinions coming back with no further treatment recommendations , you know , even for just general maintenance or to address future flare-ups , and this can sometimes give an insurer the grounds to close a person's file long before they've even hit that existing $50,000 limit as it currently stands in those first two years .

Michael McVey 8:42

But by no means does such an opinion mean that the injured person is actually better . It doesn't mean that they have fully recovered from the accident and are back to their old selves , and it doesn't mean they won't ever need any more treatment for their injuries ever again . But once those accident benefit files are closed by the insurance companies , many injured people find it very difficult , if not impossible , to get them to reopen that file again .

Cynthia Carels 9:07

But thankfully under our current system as it currently stands , if those accident benefits files get closed , it's not the end of the line for innocent injured victims . We still have the ability to sue the at-fault parties to make up for those losses that are going to be associated with ongoing disabilities that might actually end up being permanent and not ultimately fixable .

Warren Berg 9:29

So under this proposed new "care first system that right to sue goes away .

Michael McVey 9:34

That's exactly right . A no-fault system removes the right of the innocent victims to claim for all of their harms and losses from the wrongdoer and leaves them only access to the revised schedule of benefits provided by their own car insurer under the new legislation . In other words , limits are going to be placed on what can or cannot form part of a claim and , in addition , the change also provides the same schedule of benefits for the person who caused the accident in the first place . That , on its face , seems pretty unfair .

Warren Berg 10:02

So I'm guessing that the impression here is that you don't think no-fault insurance is a good idea . Why is that ?

Michael McVey 10:09

First of all , you're right , I don't think no-fault insurance is a good idea , and there are three main reasons why that's the case .

Michael McVey 10:16

So , first of all , what is being proposed here is a private no-fault system , which is very different than many other no-fault systems around the world , which operate under a public no-fault system . This is a very important point that we'll discuss in more detail in a moment . Secondly , the proposed changes also remove the rights of Albertans to pursue claims with the courts . This means that injured people will not be able to obtain the assistance of lawyers to have their cases resolved by an impartial judge who would be following our well-established precedents in case law . This puts injured people at a significant disadvantage because , instead of having their case adjudicated on its own facts and merits , they will be limited to a predetermined schedule of benefits administered by a private corporation . Third , private no-fault insurance will not likely accomplish the goal of reducing insurance premiums in the long term , even though that's why the changes are currently being proposed . So this means that Albertans will be giving up significant rights in exchange for promises of future savings that are unlikely to happen , and that just doesn't make sense for Albertans .

Warren Berg 11:20

So I guess maybe we should tackle one issue at a time here for Albertans . So I guess maybe we should tackle one issue at a time

Private vs Public No-Fault Insurance

Warren Berg 11:27

here . First of all , why does it matter that this is a private no-fault system and not a public no-fault system ?

Cynthia Carels 11:31

Honestly , warren , to put it very bluntly , in a private system that's actually run by corporations instead of a government , there's actually a built-in incentive for those private corporations to earn profits for the companies and for their shareholders , whereas in a public system , a government is essentially operating the insurance system .

Cynthia Carels 11:52

Sometimes you'll hear these organizations called things like a crown corporation . So you know , we could look at , say , saskatchewan government insurance , and a crown corporation is motivated by a very different set of key performance indicators from a privately funded corporation , and the audience is also very different . So , for example , if a crown corporation is too profitable , voters are going to be outraged that they're being overcharged . They're being soaked here by this crown corporation charged , they're being soaked here by this Crown Corporation . Whereas if a Crown Corporation is bleeding out money , then voters are going to be outraged because these losses are going to have to come out of other public services or out of increased taxes . So Crown Corporations , theoretically , are supposed to be operating insurance systems that are looking for that sweet spot where the premiums and the payouts are well balanced and self-sustainable . Now I don't want to give the false impression that this is a panacea or some sort of utopia , because it does not always happen .

Cynthia Carels 12:54

So you know , we can look to our neighbors in BC where the Insurance Corporation of British Columbia , you know , commonly known as ICBC , has at times been used . You know , if you look back in the history books here , known as ICBC has at times been used . If you look back in the history books here , sometimes ICBC has been accused of being a cash cow that has been used to line the coffers of the provincial government's general revenues , obviously much to the consternation of the rate payers . But then on the flip side , there have been other times where its operational costs have been characterized as a dumpster fire in comparison to its revenues . And eventually BC decided ultimately to adopt a no-fault system too , you know . But even still we hear horror stories all the time about injured British Columbians under their new no-fault system who are facing terrible outcomes and serious dissatisfaction with its overall management .

Michael McVey 13:46

But the motivation for private companies is much clearer than corporations , than crown corporations , I should say . They are supposed to be earning a profit and generating growth for their shareholders Two outcomes that can be perceived as sort of a conflict of interest between the insurance companies and its injured customers . Any money that is paid out to an injured person necessarily means that the insurance company is going to earn less profit . In other words , if you increase the expenses for the corporation by paying out victims , the company's net profit goes down . So injured Albertans who need treatment or disability benefits will be relying on an insurance company to do the right thing , when doing the right thing means the corporation should be spending money instead of saving it or deploying it for future growth .

Warren Berg 14:32

Okay , so under this new plan , what happens if the insurance company does not do the right thing ?

Michael McVey 14:38

And that gets to that second point I mentioned previously , Warren . Part of this new system is that injured Albertans will be prevented from pursuing claims in the courts when an insurance company does not do the right thing , and , quite frankly , that is a very big problem for Albertans . The right of an individual to have their disputes resolved in a court of law is just about one of the most fundamental rights there is in our society . It's right up there with the right to live a free life . Albertans need to think long and hard about whether they are prepared to allow the government to strip them of that right to pursue claims with the courts .

Cynthia Carels 15:10

Absolutely so right now , Warren . As it currently stands , an injured person can try to negotiate a settlement with an insurance company on their own . However , if the insurance company is not negotiating fairly or if that person has concerns about how they're being treated right now , they have the ability to retain a lawyer to help them and to take these matters to courts . And lawyers obviously have training in determining how to put appropriate values on these bodily injury claims . But we also have training and experience in using the law and the courts to effectively resolve these kinds of disputes . And while some injured people do have an understanding of the law in this area , many people don't Overwhelmingly most Albertans really don't . So the ability to retain a lawyer helps to sort of balance those scales of justice for individual Albertans , because they can gain tremendous benefit from a lawyer who knows what fair compensation is for their specific injuries as well as their resultant losses .

Michael McVey 16:07

But if an injured person does not have the ability to retain a lawyer , it is extremely difficult for them to even know if they are being treated fairly by an insurance company , let alone do anything about it if they think they aren't being treated fairly .

Warren Berg 16:18

Okay , so that's very interesting to know . Why would anyone want to operate under a no-fault system ? I guess is the question that begs to be asked .

Cynthia Carels 16:25

That's an excellent question , and the reason is that no-fault systems exist , supposedly to lower the costs of insurance . So you know , governments can deliver on their promises to taxpayers , to voters , to reduce those premiums that individuals and businesses have to pay for their coverage , or at least that's the idea anyway .

Warren Berg 16:47

And I would take it that it doesn't always work out that way .

Cynthia Carels 16:50

It does not always work out that way . No , it is a bit more likely for governments to deliver on insurance savings with public no-fault systems or crown corporations , you know , simply because the government is not supposed to be trying to earn a profit , simply because the government is not supposed to be trying to earn a profit . However , with private insurance companies , they are for-profit businesses and their goal is to earn as much profit as they can . So , as a result , a private no-fault system really means insurance companies are motivated by profits , to the extent that they're able within the rules that are imposed on them by governments . They're able within the rules that are imposed on them by governments . But the rules of profitability at their most basic involve bringing in as much money as possible while limiting payouts as much as possible .

Michael McVey 17:34

It's not just that . It is questionable as to whether or not private no-fault insurance even does reduce payout costs for insurance companies . For example , under the current system , once those limited preliminary accident benefits are paid out , there is only one claim left standing , and that is the claim of the innocent victim . But even that claim ends when the lawsuit is settled or when a judge makes a decision following a trial . However , in a no-fault system , the insurance companies are now facing two claims , one for the innocent victim and one for the at-fault driver . So right there , you have doubled the number of claims , which is not a particularly good way to reduce costs .

Cynthia Carels 18:12

Yeah , unless the eligible values of those claims are driven way down . So the at-fault driver can be treated just the same as the innocent one .

Michael McVey 18:20

Right and , in addition to that , under the current system , an insurance company's involvement ends when the lawsuit is settled or when there is a judgment . This could take a year , five years , depending on the claim , but overwhelmingly there is finality to lawsuits and they are resolved by way of a lump sum payment for both past and future losses . However , in a no-fault system , the insurance company is supposed to pay for care on an ongoing basis , as needed .

Cynthia Carels 18:46

Yeah , well , whether they actually will , that remains to be seen .

Michael McVey 18:50

And that's a fair point . But theoretically speaking , in a no-fault system , insurance companies are supposed to be paying for care on an ongoing basis . So if someone is left with a permanent impairment or permanent injury , their file could remain open for 10 , 20 , 30 , or even 40 years , depending on the age and lifespan of the injured victim . This significantly extends the timeline of files , which again is not a good way to predictably limit a company's exposure to costs .

Cynthia Carels 19:18

Yeah , and another point , mike , regarding the cost of care is that if insurance companies have an incentive to avoid paying for treatment , even in cases where an injured person is still accessing care , this could increase costs to Albertans in yet another way .

Cynthia Carels 19:34

How's that Because if an injured person needs treatment that was previously paid for by a lawsuit against an at-fault driver , the fact that they need that treatment doesn't go away . But they have instead now been cut off by their own no-fault auto insurer and they're going to have to look to the public health care system to pay those costs . So this is now going to be exposing our health care system to increased expenses that otherwise could have been borne by the auto insurance system that we have all been paying into . So this can end up being a bit of a shell game , where purported savings to the auto insurance premiums might end up being offset by the need to increase taxes to pay for higher health system usage . Or alternatively and in my opinion in some cases even worse individual Albertans are going to be stuck footing their own bills for access to therapies that aren't covered by provincial health care at all , once their insurance company decides to cut them off .

Michael McVey 20:32

And there's another point on this topic that we haven't discussed yet . In the current system , the claimant is not an insured person with the insurance company that is defending the claim . In other words , the innocent victim does not have a contract with the insurance company defending and paying out the claim . Instead , the insurance company has a contract with the wrongdoer to defend them should they cause an accident and injure somebody .

Warren Berg 20:55

So why would this make a difference ?

Michael McVey 20:57

This is an important point because right now , the insurance company's obligations to the innocent victim are limited by the operation of our existing tort law system . That all changes in a no-fault system . When you move to a no-fault system , both the innocent victim and the wrongdoer are relying on contracts with their own insurance company . Because the claimant will have a contract with the insurance company , the insurance companies have the obligation to act with the utmost good faith , which is a much higher standard than the current system , when they're dealing with an injured victim . The reason this is important is because it opens up insurance companies to a new type of lawsuit where they do not meet the standard of utmost good faith . This means that there could still be costs associated with defending against lawsuits where the allegations are that insurance companies were acting in bad faith .

Cynthia Carels 21:48

Yeah . So these bad faith claims , we don't see them a lot right now because of the way that our tort system is set up and bad faith claims are difficult to pursue and obviously you know they're very different than actually suing an at-fault driver for causing your losses . Now I mean we could spend a whole show getting into the weeds on bad fault claims , bad faith claims but suffice it to say there are still going to be legal costs associated with defending lawsuits . So when you're hearing this thing that they're trying to get lawyers out of the system , it's just not going to happen . Even with a no-fault system , we are still going to be having lawyers in that equation .

Michael McVey 22:29

So , if I can just try to summarize that point for a second , it is very questionable as to whether or not no-fault insurance does actually decrease the overall cost of claims or deliver savings to rate payers . However , even if the system does reduce the cost of claims to a certain extent , where will those savings show up on the balance sheets ? Are we going to see the savings reflected with increased profits for private insurance companies or savings for consumers ? And I'd suggest to you , warren , it's unlikely that those profits are going to go to consumers and instead are going to go to profits . So this is essentially a handout to large insurance corporations at the expense of the rights of everyday Albertans .

Warren Berg 23:10

Now I can see how there's some big problems with this type of system . Are there any other issues that you see ?

Cynthia Carels 23:16

Oh yeah , in my view there are at least .

Debating Accountability in Automobile Insurance

Cynthia Carels 23:19

One issue that we haven't talked about is just the overall idea of accountability , and I think you know talk to most everyday Albertans . Accountability is a big deal for most of us , and a no fault system largely removes accountability from the picture because it's providing an at fault driver , so that bad driver who's caused the accident , with the same benefits as the innocent person that they injured . And for myself personally , I cannot understand why somebody who's driving recklessly or negligently should be entitled to the same insurance benefits as the person whose life was forever changed by that recklessness . And holding people accountable for their wrongs is so important for a number of reasons , but over and above everything , it's simply just the morally right thing to do . But it also provides an incentive to ensure that people who choose to drive because driving again , it's a privilege , not a right If you're choosing to drive , you are actually doing so with everyone else's safety in mind .

Warren Berg 24:19

And speaking of keeping other people in mind , this is probably a really good time to remind our listeners of how they can get a hold of you .

Cynthia Carels 24:25

Yeah , it's a good idea . So the best way to find us is by searching out our website at wearebowencom , that's w-e-i-r-b-o-w-e-ncom . And what if the internet is not an ?

Warren Berg 24:37

option ? What if the internet is not an option ?

Michael McVey 24:39

Listeners can also call our office phone number , which is 780-424-2030 . That's 780-424-2030 . Our intake team is ready to take calls Monday to Friday and they will make sure you get connected with the lawyer who can answer your questions .

Warren Berg 24:57

This is Ask the Lawyer on CFWE and CJWE , the Wind Speaker Radio Network , with we're Bowen LLP . I'm Warren Berg and today we're speaking with Cynthia Carrolls and Mike McVeigh about proposed automobile insurance reforms which are on tap for the province of Alberta . And , Mike , I've got to say , insurance premiums in Alberta are high compared to many other provinces . From what I understand and our cost of living is already very high these days is from what I understand , and our cost of living is already very high these days . So if you're to say that no fault insurance isn't likely to deliver savings that we're being promised , what else can be done to lower insurance premiums ?

Michael McVey 25:31

It's interesting that you asked that question and it's one that I think we all have a lot of concern about .

Michael McVey 25:36

Insurance premiums are a pocketbook issue for Albertans every month and , unlike other products we spend money on , insurance is one of those things that we hope we'll never need , and you're right . I think it's fair to say that all Albertans have recognized that the cost of living in this province is high , and I agree . We need to make changes and efforts to reduce the cost of living in this province , and I think there are things that can be done to offer more choice to consumers , allowing them the ability to lower their car insurance premiums without stripping them of their rights to claim compensation for their injuries and losses through the courts . And , in fact , acla , the Alberta Civil Travellers Association , met with representatives of the Insurance Bureau of Canada or the IBC to discuss options for offering more choice and reducing premiums and ultimately , acla and the IBC submitted a joint proposal to the Alberta government with ideas on how to offer more choice to Albertans while , at the same time , offering them the ability to lower their insurance premiums .

Warren Berg 26:34

So what happened with that proposal ?

Michael McVey 26:36

Believe it or not , it was essentially ignored . Seriously , yes , it was , and in preparing the proposal , we were able to show that one of the biggest contributors to high insurance premiums was not personal injury claims or bodily injury claims by innocent accident victims . Instead , the high cost of property damage claims or the cost of fixing damaged vehicles was a significant contributor to high insurance premiums . Part of the proposal was to offer the choice to Albertans as to how they could be compensated for their property damage claims in the event that they were not at fault for the accident and , in addition , another idea was to offer Albertans the choice of having their vehicles repaired with basic parts or aftermarket parts versus brand name parts , in exchange for savings on their rates . And now , if these two changes were implemented and no other changes were made at all , albertans would have the ability to choose to reduce their premiums by between $350 to $450 per year . However , as I said , these proposals were essentially ignored .

Warren Berg 27:36

Okay . So I've also seen and heard advertisements suggesting that lawyers might be the problem and their legal fees are responsible for increasing insurance premiums . So , with two lawyers here on the hot seat , what is your response to those accusations ?

Cynthia Carels 27:50

Oh yeah , I have seen those ads , Warren . They get forwarded to me on social media all the time and , quite frankly , those suggestions are just misleading . As a personal injury lawyer , the insurance companies are not paying my legal fees . It's my clients who are paying my legal fees and they're paying those legal fees to me personally .

Cynthia Carels 28:11

So to give you an idea of how lawyers like Mike and I represent our injured clients , we typically enter into what's called a contingency fee agreement and essentially this means that as lawyers , we're not getting paid until a settlement or judgment is obtained for a client and if that claim is successful , then the lawyer is entitled to a percentage of the recovery , and it's usually about in the range of 30% of what they ultimately get for their injuries .

Cynthia Carels 28:36

But that money is paid by the clients . The misleading part of these advertisements is that legal fees don't make up a portion of our assessed value of our injured clients' damages at all . Like when we send over a settlement proposal , there's nowhere in there that says and this person is going to have to pay Cynthia $10,000 for legal fees . It just doesn't show up in those settlement proposals . So the fees that are paid to lawyers are subject to arrangements between lawyers and the clients and our clients don't get to just turn around and submit a statement of account to the insurance company for reimbursement saying , okay , now you have to pay back my lawyer's fees .

Michael McVey 29:14

And , as we mentioned earlier , regardless of whether Alberta's insurance scheme changes or not , the insurance companies are still going to be paying for their own defense costs and their own defense lawyers . So accusations that lawyers and legal fees are the root of rising premiums is a non-starter . Really . It's just a distraction from the fact that insurance companies have actually been quite profitable in Alberta but still have not reduced their premiums .

Warren Berg 29:39

Okay , so let's turn this to the care first model that we are expecting the Alberta government will try to bring on board in roughly two years' time . Will Albertans actually be able to access care more quickly than the current system ?

Cynthia Carels 29:53

Well , the truth is , warren , the current system already does provide accident benefits to insured people so that they can get access to physio , to chiro , to massage therapy if they're injured and treatment is needed to help them get better .

Cynthia Carels 30:06

And as personal injury lawyers ourselves , we see people who are injured in car accidents all the time and they're usually getting access to treatment really quite quickly at first .

Cynthia Carels 30:15

In fact , you know , the first 90 days after an automobile accident insurance companies I'm going to give them a lot of credit for this actually , days after an automobile accident Insurance companies I'm going to give them

No-Fault System and Injury Claims

Cynthia Carels 30:24

a lot of credit for this .

Cynthia Carels 30:24

Actually , they're really pretty good about getting injured people set up with access to treatment benefits under what's known as the Diagnostic and Treatment Protocols Regulation and , depending on what injury someone has , it's generally very easy and straightforward to get access to between 10 and 21 treatments without a lot of hassle . You know you do need to fill out some paperwork , which can be a bit of a hassle , but it's not that bad . You're going to have to have your treatment provider set out a plan for your rehabilitation and again , that seems reasonable and overwhelmingly the insurance companies are going to get these claims set up quite efficiently and in many cases they will even directly pay most clinics . You know , as an example , since these regulations came into play , I myself have personally been into automobile accidents and I was able to get access to enough physio and massage and chiropractic care in those first 90 days that , honestly , I felt like I was in treatment just about every second day for eight weeks .

Michael McVey 31:19

Now , after that , it gets a bit more complicated , because if you have private health benefits of your own , say through an employee benefit plan or through Alberta Blue Cross , then there's a protocol to coordinate those benefits and the benefits provided by the auto insurer , and at that point they become a second payer . But once those headaches get sorted out , we still see that access to care remains pretty consistent for at least the first six to nine months . And then what happens ?

Cynthia Carels 31:48

So , as care extends beyond that nine months , insurance companies do start looking for some ways , you know , to determine if this ongoing care is actually needed for rehabilitation and , you know , to see if there's perhaps some ways that they might be able to close a file . How ?

Warren Berg 32:03

so .

Cynthia Carels 32:03

So there's a lot of different ways this can happen , but an individual insurance company adjuster is the one who's on the front lines , and we do see all sorts of different approaches to this . Sadly , we have such seen situations where our clients , you know , experience a communication breakdown , such as you know . They simply can't get a hold of their adjuster in a timely fashion anymore and , and even when they do , they might get an answer that is perhaps out of line with what their own doctor or their therapist is recommending . And , in addition , the insurers might also decide to get their own physician to write up a treatment plan and even if that doesn't jive with what your treatment team recommends , they are going to be able to rely on the legislation to approve what their doctor is saying , not yours .

Michael McVey 32:48

And under the current system , when this happens , that individual claimant is able to hire a lawyer to help them , and that can take the form of a few different options . Sometimes we will pursue a claim against their own insurance company to get those benefits reinstated . Sometimes it makes more sense to pursue a claim against their own insurance company to get those benefits reinstated . Sometimes it makes more sense to pursue that claim for past and future cost of treatment against the at-fault driver , in addition to their pain and suffering , loss of income and other losses . But with a no-fault system , Albertans will be prevented from hiring a lawyer to help them with these disputes and to recover money from the person who caused them harm . Instead , they will be left to fight against the insurance companies on their own . So these changes are going to significantly affect the people with serious but perhaps not catastrophic injuries the most .

Warren Berg 33:34

So I guess , what do you mean by I guess ? What's the difference between a serious and catastrophic injury ?

Cynthia Carels 33:39

Yeah , that is a really important question because a lot is actually going to turn on that when we move into a no-fault system . So I think , to simplify , we can largely place injured accident victims into one of three categories . So that first category relates to , you know , many , many people who are injured initially but through treatment or the passage of time , their injuries get better or , you know , know , don't really bother them for it , you know , seriously for the long term . So we're gonna call those that category of minor injuries and we currently have restrictions on our ability to claim for pain and suffering damages for a significant portion of people who fall within that category . There actually is a minor injury regulation that was brought in back in 2004 . That regulation caps the pain and suffering awards that we can claim for minor injuries and , when we adjust it for inflation , the maximum minor injury amount is now just over $6,100 in 2025 .

Cynthia Carels 34:39

Now , on the other end of the spectrum from the minor injuries is this second in second category and that is for people with very serious or catastrophic injuries . So these people are suffering from traumatic brain injuries or spinal cord injuries . They're going to have conditions like paraplegia or quadriplegia and in that category those injuries are clearly so objectively serious and life-altering that the insurance company can't really credibly dispute the need for things like income replacement or , you know , the need for significant ongoing care . It's this third category that is going to encompass a lot of gray area between those two extremes of minor and catastrophic . So these people do not have catastrophic injuries but their disabilities are permanent and they are going to have ongoing issues that impact their daily lives or the rest of their lives . And this category of injured victim I think is going to be one of the most significantly affected under that no-fault care first legislation .

Warren Berg 35:41

And why would that be ?

Michael McVey 35:43

Well , the reason is that within this category of injured victim , there tends to be a lot more dispute about the extent to which the injured person's life has been affected by the accident .

Michael McVey 35:54

For example , many of these individuals can still work , but may have been required to find new employment because their old jobs were not appropriate for them any longer due to their injuries . Alternatively , they might be able to go back to their old job , but with accommodations or limitations on overtime , or maybe they're now more likely to need early retirement . There are situations where some of our clients are able to go back to work , but if their supervisor was to change , they might be more likely to face layoffs and they would have more difficulty finding a new job because there are certain categories of jobs that are no longer appropriate for them due to their injuries . These situations happen all the time and under the current system , we get to look at each individual's particular circumstances to assess the extent of compensation someone should get , and if we can't come to an agreement with the insurance company , we can ask the court to decide the issue .

Cynthia Carels 36:45

Yeah , and in addition there tends to be a disagreement on the level of care or replacement services that each individual person is going to need in the future and again , currently it's dependent on their particular circumstances . So in these questions or these circumstances it's often necessary for us to hire experts to help us kind of fill in those blanks . But then our courts and our clients are able to rely on those experts to make really informed decisions about those future needs .

Michael McVey 37:11

And because of the disagreements in these areas and with this particular type of accident victim , it is really important that these injured people have access to a lawyer in order to ensure that the appropriate steps are being taken to answer these questions that arise in the context of their particular claim . Given that they won't be able to access a lawyer to help them in a no-fault system , I am very concerned that these individuals will not get what they need to treat them fairly in light of the injuries that they suffered in that accident .

Warren Berg 37:40

You mentioned that there are already some limits placed on certain types of claims . Can you explain that to our audience ?

Cynthia Carels 37:46

Yeah . So , as I mentioned earlier , alberta already has a minor injury regulation in place . This puts a cap on the ability to claim for pain and suffering for people who suffer those minor injuries and this regulation applies to people who suffer things like soft tissue injuries , you know , sort of low level sprains and strains and whiplash injuries . And in cases where people receive treatment and recover their injuries , they're going to be subjected to that cap . If they have other calculatable injuries , like out-of-pocket expenses or income loss , we can still seek recovery for those amounts . It's just that that pain and suffering amount is limited to the minor injury amount that we said was just over $6,100 . And this has been in place since 2004 when it was first set at $4,000 . So every year that amount does get adjusted for inflation and honestly , you know , despite there being kind of a period of legal hullabaloo when that was first introduced , that cap has actually been pretty useful for many Albertans with minor injuries who do get better and really don't need a lawyer's involvement . In fact , I open a lot of files where I say let's just see how it goes . If you have the minor injury , you might actually not need me and you can carry on by yourself . However , there are people who don't get better from these kinds of injuries and they still can pursue their pain and suffering damages just like any other claim . And that's due to the fact that if someone suffers a permanent injury , then we argue it is not minor .

Proposed Changes to Automobile Insurance Compensation

Cynthia Carels 39:07

But what is being proposed now with no-fault insurance would dramatically expand the limits that are being placed on these kinds of claims .

Warren Berg 39:14

So what kind of limits are you expecting ?

Michael McVey 39:17

So , first and foremost , there will be people who are injured in car accidents who won't receive any compensation for their pain and suffering . That is a big change from the current system , because every wrongly injured person in a car crash can claim for pain and suffering . There are just some who are currently subject to that minor injury regulation Cynthia talked about . In addition , the current upper limit for pain and suffering awards is also facing major changes . How so Well , to give you a little bit of legal history in Canada , in 1970 , the Supreme Court of Canada set an upper limit on what we can claim for pain and suffering awards .

Michael McVey 39:55

This was a series of cases that was known as the Trilogy . The Damages Trilogy involved three different lawsuits from 1978 and that established the high watermark at about $100,000 at that time . When we adjust that amount for inflation to 2025 , that amount is now over $450,000 . So for catastrophically injured Albertans , under the current system we can seek pain and suffering awards in that upper range , but under the CareFirst system , the government's website is currently saying catastrophically injured Albertans may be entitled to permanent impairment lump sum to a maximum of $295,000 . For those falling in that middle ground we talked about earlier , who suffer serious injuries that aren't covered by the minor injury regulation . The Care First system seems to suggest that they may be entitled to a permanent impairment lump sum between $1,000 and $187,000 .

Cynthia Carels 40:55

And that's just for the pain and suffering portion of that which , under this new system , is just going to be called a permanent impairment lump sum . Now we currently call those kinds of damages non-pecuniary awards . It's kind of a fancy way of saying this is something that can't really be mathematically calculated . So how do you put a price on pain , right ? So we currently rely very heavily on precedents that have been set by case law . But in addition to the new caps on this pain and suffering or those non-pecuniary damages , we're also anticipating limits are going to be placed on what an insurance company has to pay for some pecuniary damage , some calculatable damages like loss of income .

Warren Berg 41:34

So I guess what you're saying is we won't be able to sue for our lost income under the new model either .

Cynthia Carels 41:39

So right now there are some modest income replacement benefits available as part of that no-fault suite of benefits , but by no means are those benefits fully compensatory for everyone who needs time off work for an accident or for someone who might never be able to go back to work . So this is where our existing tort law system really shines , because we are currently able to sue at-fault parties for the difference between what they should have been earning versus what we actually were able to recover for them through those accident benefits . And in that analysis , we currently get to look at the specifics of each individual client's earning power . So if your income is $50,000 a year , or if it's $500,000 a year at the moment , we can sue for recovery of your loss of income based on your specific situation .

Michael McVey 42:27

And despite complaints about our high cost of living in Alberta , we also have the benefit of having a lot of high income earners in this province who could end up being quite surprised if they need to access income replacement benefits under a no-fault system . So what is being proposed ? Well , according to the government's Care First model , the benefits will cover a gross income level of $120,000 .

Warren Berg 42:48

And what if somebody's income is , let's say , over $120,000 ?

Michael McVey 42:52

$120,000 . And what if somebody's income is , let's say , over $120,000 ? Albertans are going to have to think about that when they are buying their insurance policy and they'll have to decide for themselves if they want to spend more to purchase even more coverage for income support benefits in anticipation of being involved in an accident .

Warren Berg 43:04

So let me understand this A good driver who is also a high-income earner is going to have the option to spend more in order to protect their income from bad drivers .

Cynthia Carels 43:15

Very good . So you see why we are raising some concerns about this . When people are actually thinking about what kind of coverage they want in place , they're shopping around for the best rates on insurance , right ? I think there's a lot of people out there who could actually be quite surprised to find themselves in a position where they're not getting sufficient coverage for their income loss if they're injured in an accident through no fault of their own and they hadn't really thought about bumping up their income loss coverage on their own automobile insurance to protect their own income from bad drivers . And again , albertans are going to be giving up their rights to fair compensation in exchange for this care first system . I don't think that's right , and I don't think a lot of Albertans will think that's right either when they learn about what's being proposed . But unfortunately , that learning itself might not happen until injured people find themselves face to face with a life changing injury and they discover they don't have legal recourse to access true compensatory damages .

Warren Berg 44:16

Okay . Are there any situations where Albertans will have the right to sue for their injuries once this system is in place ?

Michael McVey 44:22

So just to be clear , the proposed no-fault system will apply only to car accident injuries . So if your injuries are the result of some other kind of wrongdoing , such as medical negligence or a slip and fall claim , then our existing tort law system will remain accessible to you . In addition , the government has indicated that there will be certain circumstances where Albertans injured in car accidents are going to be permitted to sue at fault drivers , which will include those drivers who are convicted of criminal offenses , such as impaired driving , dangerous driving or other offenses under the Traffic Safety Act .

Cynthia Carels 44:58

You know and on the surface that does sound pretty reasonable . Most people looking at that would go okay , that seems fair . However , I cannot even count the number of personal injury claims that I've handled already where the at-fault drivers committed some pretty egregious offenses and were either never charged criminally or they had their charges dropped for one reason or another , and the threshold for a criminal charge to actually be successful is very , very high , whereas the threshold for civil liability when we're suing for compensation is much lower .

Warren Berg 45:31

So I guess the question here is what's the difference ?

Michael McVey 45:34

Well , you've probably heard the phrase that for someone to be convicted criminally , the court must be convinced of that person's guilt beyond a reasonable doubt . As a society , we've determined that's a good thing , because we don't want to be convicting people criminally unless the court is really sure of their guilt . However , as a result of that very high threshold , it's not unusual for us to hear about some pretty awful behavior escaping criminal convictions . But in the world of civil litigation the standard of proof is lower and we describe that standard as a balance of probabilities . In other words , we have to convince the court that the wrongdoer is more likely than not liable for the alleged damages . With the proposed model that only maintains a right to sue if a defendant is convicted , the government is unilaterally changing the burden of proof for civil lawsuits from a balance of probabilities to that beyond a reasonable doubt criminal standard . Victims will be totally reliant on Crown prosecutors to successfully move a case to conviction in order to preserve their civil right to sue . So even if a very strong case falls apart on a technicality such as prolonged delay , that could extinguish an innocent victim's right to sue .

Michael McVey 46:46

In addition to that , there are concerns with the ability to recover from drivers who are convicted of criminal offenses With insurance coverage . In general , one of the valid reasons to deny insurance coverage was if the loss was caused while the person was committing a criminal offense . That is the default rule . But that default rule doesn't apply in the context of car accidents , as the law requires the insurance company to pay the innocent victim regardless of whether or not their insured person is convicted of a criminal offense . However , in provinces with no-fault insurance , drivers who cause accidents and are convicted of criminal offenses do not have insurance coverage to pay for the losses of the innocent victim . The innocent victim is then left with the usual no-fault benefits , and this exception really doesn't provide a benefit , because the innocent victim is then left trying to recover their losses from someone who doesn't have insurance coverage and is unlikely to be able to pay for the injuries and losses that they caused in the accident .

Cynthia Carels 47:43

Yeah , and that goes to another point I noticed when reviewing that CareFirst website . It's that the injured Albertans will also be able to sue for out-of-pocket expenses that go beyond their insurance coverage . And that set off a huge red flag in my mind because it could leave the effective ability to recover expenses dependent upon the wealth of the person who caused the accident in the first place . So if you have major out-of-pocket expenses not covered by your own insurance , this right to recover is going to be highly dependent on how much money or other liability insurance that a wrongdoer actually has to pay out a judgment against them .

Warren Berg 48:18

So I'm guessing . In many ways it seems like this proposed system could cause just as many problems as it's trying to solve . But there must have been some examples where insurance payouts going down without such drastic interventions don't .

Cynthia Carels 48:33

Yeah , there have been . Interestingly , we actually have a fairly recent example of what happened during the COVID-19 pandemic . During COVID , people were asked to stay home . They were working from home wherever possible , and what that did was actually significantly reduce the amount of traffic . You know , albertans were not driving as much and given that Albertans were driving significantly less , the number of accidents was also significantly reduced .

Michael McVey 48:56

And this meant immediate savings for the insurance companies , because there were fewer property damage claims and they could also anticipate that their costs for personal injury claims would decrease accordingly . However , we did not see reductions in our premiums during these periods . Instead , the insurance companies kept the profits for themselves and didn't pass them on to Albertans .

Cynthia Carels 49:16

In fact , for 2025 and 2026 , the government now is even adjusting the good driver rate cap to allow for a 7.5% increase in premiums each year for this year and next year , before we're ever even supposed to see any savings from this proposed no-fault insurance system . And in the literature that the government has put forward about their plan , they're referencing an annual savings of about $400 a year , without really clarifying compared to what ? Is that compared to our current prices today ? Or is it compared to what we're going to be paying after two years of this 7.5% good driver premium increase ?

Warren Berg 49:51

Now is there an example of a no-fault system in Alberta that Albertans could look to in order to get maybe a real-world understanding of what this change could look like .

Michael McVey 50:01

There is , in fact , a no-fault system currently in place in Alberta that many people are familiar with , and that is the workers' compensation system . If you were injured at work , it doesn't matter whether or not you were at fault . You are entitled to benefits and you're not required to sue your boss or your co-workers if they were the ones who caused your injuries , and I admit , that sounds like a reasonable way to do things on the surface . However , when you hear stories about how the system actually operates and you hear that people have significant difficulties accessing income replacement benefits or coverage for the treatment they need , we start to learn that the system doesn't operate the way we hoped it would theoretically .

Cynthia Carels 50:39

You know , and the WCB system is an independent , not-for-profit corporation , so , different than what we're expecting with the auto- insurance .

Cynthia Carels 50:47

So it's a not-for-profit corporation that administers the system . It's funded by employers who are paying premiums and it's operating within the oversight of a 10-member board of directors and that board is accountable to the government . It's directly accountable to the Minister of Jobs , economy and Trades for the province of Alberta . But in the no-fault auto insurance system being proposed we are going to be dealing with private for-profit companies , so very different than WCB . So this is going to be adding in that motivation to earn profits into the equation that we're not supposed to be seeing with the non-profit WCB

Understanding No-Fault Insurance Changes

Cynthia Carels 51:19

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Warren Berg 51:19

This is Ask the Lawyer on CFWE and CJWE . Today we're discussing no-fault insurance with Cynthia Carrolls and Mike McVeigh from Weir Bowen LLP in Edmonton . Website is we'rebowencom . That's W-E-I-R-B-O-W-E-Ncom , Phone number 780-424-2030 . Cynthia , given a change to no-fault insurance will limit access to lawyers . I think some people may wonder if you and Mike are speaking out about this because , well , you're lawyers and worried about your jobs .

Cynthia Carels 51:51

You know , fair question and I can understand how someone could think that . And it's true , there are going to be many lawyers whose practices are going to be deeply affected by these changes . However , on the flip side , as personal injury lawyers , we are also very well positioned to see the downside risks of this proposal that the average Albertan might not fully understand or appreciate , particularly when they're being promised that they're going to have savings on a monthly bill that none of us really like to pay . So our goal here today , by spending , you know , an entire show focused on these upcoming changes , is to make sure that you know , to the extent we can in an hour , to inform Albertans of some of the real costs associated with those proposed savings .

Cynthia Carels 52:37

That money , those proposed savings , it's not coming from nowhere . It's ultimately coming out of the pockets of future injured Albertans who are going to need it most and won't be able to hire a lawyer to help them get it . And despite our hope that none of today's listeners are going to fall into that category of future injured Albertans , we know that is far from likely . You know , like I said before , I myself have been in two pretty serious accidents due to no fault of my own , and I'm profoundly thankful for our existing system of tort law as an injured person , where I was able to seek appropriate compensation from the negligent drivers who caused those collisions . Now , ultimately , it is the Albertan people who themselves are going to get to decide whether or not they're going to accept these changes , because we still think there is time to make voices heard by this provincial government before the proposed changes are implemented in January of 2027 .

Warren Berg 53:31

So , Mike , when Cynthia says that the goal is to inform people about the issues of no-fault insurance , is there somewhere they can go to get ?

Michael McVey 53:47

more information about these issues . Yes , there isairabca . And what is Fair Alberta ? Fair Alberta is a coalition of concerned consumers , medical professionals , Albertans who have had to fight insurance companies and members of the legal community , who are all committed to protecting the rights of individuals that have been injured in motor vehicle accidents . One of the functions of FAIR is to advocate to the and is there anything else that Albertans have access to a fair , equitable and affordable insurance system ?

Warren Berg 54:34

And is there anything else that Joe Public like me can do ?

Cynthia Carels 54:38

Yes , there is . First and foremost , albertans should do what they can , like Mike said , to inform themselves about the proposed changes , and they can also inform loved ones , friends and family about these issues and tell them also to look at that FAIR Alberta website . They can also tell people about this show If they've heard us today . The show will soon be available for streaming on the home pages for both CFWE and CJWE and at we're Bowen . We also distribute the show as a podcast on both Apple and Spotify by searching up we're Bowen or Ask the Lawyer , and all of our podcasts can actually be found on our own website as well . So if you go to we'rebowencom , you can actually just click on a link to our podcast . And , of course , finally , albertans should be contacting their MLAs to tell them what they think about these proposed changes , because if Albertans generally aren't speaking up about it , our elected officials are going to assume either that you don't care or that you're in favor of the proposed changes .

Warren Berg 55:35

It sounds like there are a lot of considerations that Albertans need to think about as January 2027 approaches . I know it seems like a long way away , but it's going to be here before we know it .

Michael McVey 55:42

Indeed , there are Warren , and so thanks very much for having us on today in order to shed some light on what's being proposed by our government .

Cynthia Carels 55:48

Yeah , as always , we do deeply appreciate the opportunity to provide listeners with a bit of legal information , legal education , each month here on Ask the Lawyer , and we are looking forward to another great year ahead in 2025 .

Warren Berg 56:00

And our thanks today to Cynthia Carrolls and Mike McVeigh for taking us through some of these considerations Once again . If you want more information , you can access the Fair Alberta website at fairabca . That's F-A-I-R-A-Bca . You can also find information about the we're Bowen legal team at we'rebowencom . That's W-E-I-R-B-O-W-E-Ncom . You can also give them a call 780-424-2030 . We covered a lot of ground today on the first edition of Ask the Lawyer for 2025 with we're Bowen LLP in Edmonton , and we look forward to learning much more through this series , which takes place on the last Saturday of every month here on CFWE and CJWE .